Sales are budgeted at $340,000 for November2019, $320,000 for December2019, and $330,000 for January2020. Collections are expected
Question:
Sales are budgeted at $340,000 for November2019, $320,000 for December2019, and $330,000 for January2020.
Collections are expected to be 85% in the month of sale, 14% in the month following the sale, and 1% uncollectible will be recorded as bad debt expense.
The cost of goods sold is 60% of sales.
The company purchases 78% of its merchandise in the month prior to the month of sale and 22% in the month of sale. Payment for inventory is made in the month following the purchase.Depreciation is $20,200per month.
Other monthly expenses to be paid in cash are $18,000.
Other information as at 31 Oct 2019:
Cash$42,000
Accounts receivable (net of allowance for uncollectible accounts)$85,000
Accounts payable$218,000
Ignore taxes.
How to prepare Merchandise Purchases Budget? Please answer with the working
Managerial Accounting Creating Value in a Dynamic Business Environment
ISBN: 978-0078025662
10th edition
Authors: Ronald Hilton, David Platt